CA Life Insurance Practice Exam
A key person is typically all of the following, except: - correct answer--Not directly involved in
sales, production, or service
Key persons are employees whose contributions have a significant impact on the revenue
and profitability of the company, especially in small businesses. They are typically: part of
the management team, more highly paid, respected by customers, creditors, suppliers, and
vendors, and have direct responsibilities for sales, production, or service.
Which one of the following is not a reason why premium for the individual policy issued to an
insured exercising a group conversion right is higher than the group life rate previously
charged? - correct answer--The conversion policy has a higher death benefit
The premium of an individual policy issued due to a group life insurance plan conversion will
be at a higher than normal rate to include the insurer's guaranteed convertible surcharge
because the majority of all conversions involve persons that would otherwise be uninsurable,
because the conversion policy will be issued at the attained (current) age of the insured, and
the policy will build cash values.
The type of life insurance used to provide funds for a Buy-Sell Agreement is: - correct
answer--Any type of life insurance
Any type of life insurance may be used to provide funds for a Buy-Sell Agreement.
Lorraine's position has been terminated, and she is interested in converting her group life
coverage to an individual policy. In the process, she will find all of the following to be TRUE,
except: - correct answer--She will be converting her group term benefit to an individual term
benefit
She will be converting her group term life to an individual permanent policy.
To help protect against experiencing immediate claims, group plans have a(n) _______
period set up by the group sponsor. - correct answer--Probationary
A probationary period is set up to help reduce the chance of facing immediate claims.
How is the funding for Social Security provided? - correct answer--Through FICA taxes that
are paid by both employers and employees
,Both the employer and employee fund Social Security through paying FICA taxes.
Self-employed persons pay the entire amount.
The premium for optional dependent group insurance can be payable by: - correct
answer-The employer, the employee or both
Optional dependent coverage may be paid for by the employer, the employee, or both.
When an insurer wishes to implement changes to a group life policy, whom must it notify? -
correct answer-The group sponsor
Just as in individual contracts, the owner controls the policy. In this case, only the plan
sponsor has a policy (i.e. the Master Policy). As such, the insurer must notify the group
sponsor of the changes.
There is a conversion period of how many days in which the employee may, upon
termination of eligibility and without evidence of insurability, convert his/her group life
insurance benefit to an individual permanent policy? - correct answer-31
There is a conversion period of 31 days in which the employee may, upon termination of
eligibility and without evidence of insurability, convert his/her group life insurance benefit to
an individual permanent policy.
The proceeds from a _________ plan provide the necessary funds to recruit, hire, and train
a replacement employee. - correct answer-Key employee
Key employee life insurance plans provide the funds to recruit, hire, and train a replacement
employee.
Which of the following is a disadvantage of being covered under a group insurance plan? -
correct answer-The group sponsor can elect to discontinue the plan, and the insurance
company can increase the rates it charges
The advantage of an insurance funded buy-sell agreement is: - correct answer-It is a legally
enforceable agreement, which pre-establishes the value of the business, and provides the
funds for an efficient method of transferring the deceased's business interest
Some of the advantages of having such an agreement: it is legally enforceable, the value of
the business is previously agreed upon, it is an immediate and automatic method of
transferring the deceased's interest due to readily available funds.
, An agreement by an employer to continue a key employee's salary upon retirement, death or
disability as long as the employee continues employment during the term of the agreement
is called a: - correct answer-Salary continuation plan
An agreement by an employer to continue a key employee's salary upon retirement, death or
disability as long as the employee continues employment during the term of the agreement
is called a salary continuation plan.
Which of the following is not one of the most common methods of determining group
insurance benefits? - correct answer-Tax bracket
The most common methods of determining group insurance benefits are flat benefit (all
employees receive the same insurance amounts), percentage of income (employees receive
100%, 150%, or 200% of their annual base wage, subject to imputed income), and position
in the company (the employer may establish different benefits for specific classes of
employees, but may not discriminate between employees in the same class).
To be fully insured for Social Security, generally a person must have worked and paid into
the Social Security system for a minimum of ______ years. - correct answer-10
To be fully insured for Social Security, the requirement is to accumulate 40 credits or 10
years of work paying social security taxes. A maximum of four credits may be earned in one
calendar year of employment.
Every group policy containing a life insurance benefit must contain a reasonable extension of
benefits upon discontinuance of the policy for employees who, while insured under the
policy, become: - correct answer-Totally disabled
Every group policy containing a life insurance benefit must contain a reasonable extension of
benefits upon discontinuance of the policy with respect to employees who become totally
disabled while insured under the policy and who continue to be totally disabled at the date of
discontinuance of the policy.
L is no longer eligible for the employer's $50,000 group life insurance plan. L dies 28 days
later without sending in the required conversion paperwork. What will their beneficiaries
receive? - correct answer-50,000, less any premium due
The conversion period is also a grace period. In the event a terminated or ineligible
employee dies during the conversion period, whether they were going to elect individual
coverage or not, a death claim will be paid by the group policy, less the premium due for the
benefit.
A key person is typically all of the following, except: - correct answer--Not directly involved in
sales, production, or service
Key persons are employees whose contributions have a significant impact on the revenue
and profitability of the company, especially in small businesses. They are typically: part of
the management team, more highly paid, respected by customers, creditors, suppliers, and
vendors, and have direct responsibilities for sales, production, or service.
Which one of the following is not a reason why premium for the individual policy issued to an
insured exercising a group conversion right is higher than the group life rate previously
charged? - correct answer--The conversion policy has a higher death benefit
The premium of an individual policy issued due to a group life insurance plan conversion will
be at a higher than normal rate to include the insurer's guaranteed convertible surcharge
because the majority of all conversions involve persons that would otherwise be uninsurable,
because the conversion policy will be issued at the attained (current) age of the insured, and
the policy will build cash values.
The type of life insurance used to provide funds for a Buy-Sell Agreement is: - correct
answer--Any type of life insurance
Any type of life insurance may be used to provide funds for a Buy-Sell Agreement.
Lorraine's position has been terminated, and she is interested in converting her group life
coverage to an individual policy. In the process, she will find all of the following to be TRUE,
except: - correct answer--She will be converting her group term benefit to an individual term
benefit
She will be converting her group term life to an individual permanent policy.
To help protect against experiencing immediate claims, group plans have a(n) _______
period set up by the group sponsor. - correct answer--Probationary
A probationary period is set up to help reduce the chance of facing immediate claims.
How is the funding for Social Security provided? - correct answer--Through FICA taxes that
are paid by both employers and employees
,Both the employer and employee fund Social Security through paying FICA taxes.
Self-employed persons pay the entire amount.
The premium for optional dependent group insurance can be payable by: - correct
answer-The employer, the employee or both
Optional dependent coverage may be paid for by the employer, the employee, or both.
When an insurer wishes to implement changes to a group life policy, whom must it notify? -
correct answer-The group sponsor
Just as in individual contracts, the owner controls the policy. In this case, only the plan
sponsor has a policy (i.e. the Master Policy). As such, the insurer must notify the group
sponsor of the changes.
There is a conversion period of how many days in which the employee may, upon
termination of eligibility and without evidence of insurability, convert his/her group life
insurance benefit to an individual permanent policy? - correct answer-31
There is a conversion period of 31 days in which the employee may, upon termination of
eligibility and without evidence of insurability, convert his/her group life insurance benefit to
an individual permanent policy.
The proceeds from a _________ plan provide the necessary funds to recruit, hire, and train
a replacement employee. - correct answer-Key employee
Key employee life insurance plans provide the funds to recruit, hire, and train a replacement
employee.
Which of the following is a disadvantage of being covered under a group insurance plan? -
correct answer-The group sponsor can elect to discontinue the plan, and the insurance
company can increase the rates it charges
The advantage of an insurance funded buy-sell agreement is: - correct answer-It is a legally
enforceable agreement, which pre-establishes the value of the business, and provides the
funds for an efficient method of transferring the deceased's business interest
Some of the advantages of having such an agreement: it is legally enforceable, the value of
the business is previously agreed upon, it is an immediate and automatic method of
transferring the deceased's interest due to readily available funds.
, An agreement by an employer to continue a key employee's salary upon retirement, death or
disability as long as the employee continues employment during the term of the agreement
is called a: - correct answer-Salary continuation plan
An agreement by an employer to continue a key employee's salary upon retirement, death or
disability as long as the employee continues employment during the term of the agreement
is called a salary continuation plan.
Which of the following is not one of the most common methods of determining group
insurance benefits? - correct answer-Tax bracket
The most common methods of determining group insurance benefits are flat benefit (all
employees receive the same insurance amounts), percentage of income (employees receive
100%, 150%, or 200% of their annual base wage, subject to imputed income), and position
in the company (the employer may establish different benefits for specific classes of
employees, but may not discriminate between employees in the same class).
To be fully insured for Social Security, generally a person must have worked and paid into
the Social Security system for a minimum of ______ years. - correct answer-10
To be fully insured for Social Security, the requirement is to accumulate 40 credits or 10
years of work paying social security taxes. A maximum of four credits may be earned in one
calendar year of employment.
Every group policy containing a life insurance benefit must contain a reasonable extension of
benefits upon discontinuance of the policy for employees who, while insured under the
policy, become: - correct answer-Totally disabled
Every group policy containing a life insurance benefit must contain a reasonable extension of
benefits upon discontinuance of the policy with respect to employees who become totally
disabled while insured under the policy and who continue to be totally disabled at the date of
discontinuance of the policy.
L is no longer eligible for the employer's $50,000 group life insurance plan. L dies 28 days
later without sending in the required conversion paperwork. What will their beneficiaries
receive? - correct answer-50,000, less any premium due
The conversion period is also a grace period. In the event a terminated or ineligible
employee dies during the conversion period, whether they were going to elect individual
coverage or not, a death claim will be paid by the group policy, less the premium due for the
benefit.
